Provident fund trustees ‘failed its members’

AFTER a five-year-long investigation, the Financial Sector Conduct Authority (FSCA) has found that the board of trustees of the provident fund representing the security industry in South Africa, the Private Security Sector Provident Fund (PSSPF), contravened various financial sector laws and regulations and failed to act in the best interests of the fund’s members.

In a statement released last week, the FSCA says the investigation and various actions commenced in 2017, and all the members of the board who could be traced were given an extensive opportunity to respond to the various assertions and allegations.

The FSCA concluded that the board members:

¡ Failed to take all reasonable steps to ensure that the interests of members, in terms of section 7C of the Pension Funds Act, (PFA) were always protected; ¡ Failed in their fiduciary duty of acting with due care, diligence and good faith, by failing to ensure that the procurement of service providers was done in a cost-effective manner; and

¡ Failed to ensure that the resources of the PSSPF were utilised in a sound and cost-effective manner, which constituted a breach of the board’s duties in terms of the PFA and the Financial Institutions (Protection of Funds) Act.

The FSCA says it considers these transgressions serious enough to warrant appropriate regulatory action, which includes the imposition of administrative penalties on individuals and the removal of board members.

The authority also objected to the appointment of the principal officer.

The relevant board members have been served with letters in this regard and have also been informed of their right to apply to the Financial Services Tribunal to reconsider the FSCA’S decisions.